IDEAS home Printed from https://ideas.repec.org/p/her/chewps/2007-8.html
   My bibliography  Save this paper

Joiners, leavers, stayers and abstainers: Private health insurance choices in Australia, CHERE Working Paper 2007/8

Author

Listed:
  • Stephanie Knox

    (CHERE, University of Technology, Sydney)

  • Elizabeth Savage

    (CHERE, University of Technology, Sydney)

  • Denzil Fiebig
  • Vineta Salale

Abstract

The percentage of Australians taking up Private Health Insurance (PHI) was in decline following the introduction of Medicare in 1984 (PHIAC). To arrest this decline the Australian Government introduced a suite of policies, between 1997 and 2000, to create incentives for Australians to purchase private health insurance. These policies include an increased Medicare levy for those without PHI on high incomes, introduced in 1997, a 30% rebate for private hospital cover (introduced 1998), and the Lifetime Health Cover (LHC) policy where PHI premiums are set at age of entry, increasing for each year older than 30 years (introduced 2000). In 2004 the longitudinal study on Household Income and Labour Dynamics in Australia (HILDA), included a series of questions on private health insurance and hospital use. We used the HILDA data to investigate the demographic, health and income factors related to the PHI decisions, especially around the introduction of the Lifetime Health Cover policy. Specifically we investigate who was most influenced to purchase PHI (specifically hospital cover) in 2000 as a response to the Lifetime Health Cover policy deadline. Are those who have joined PHI since the introduction of LHC different from those who joined prior to LHC? What are the characteristics of those who have dropped PHI since the introduction of LHC? We model the PHI outcomes allowing for heterogeneity of choice and correlation across alternatives. After controlling for other factors, we find that LHC prompted moderately well-off working age adults (30-49 yrs) to purchase before the 2000 deadline. Young singles or couples with no children, and the overseas born were more likely to purchase since 2000, while the relatively less well-off continue to drop PHI in spite of current policy incentives.

Suggested Citation

  • Stephanie Knox & Elizabeth Savage & Denzil Fiebig & Vineta Salale, 2007. "Joiners, leavers, stayers and abstainers: Private health insurance choices in Australia, CHERE Working Paper 2007/8," Working Papers 2007/8, CHERE, University of Technology, Sydney.
  • Handle: RePEc:her:chewps:2007/8
    as

    Download full text from publisher

    File URL: http://www.chere.uts.edu.au/pdf/wp2007_8.pdf
    File Function: First version, October 2007
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Denzil Fiebig & Elizabeth Savage & Rosalie Viney, 2006. "Does the reason for buying health insurance influence behaviour? CHERE Working Paper 2006/1," Working Papers 2006/1, CHERE, University of Technology, Sydney.
    2. Alfons Palangkaraya & Jongsay Yong, 2005. "Effects of Recent Carrot‐and‐Stick Policy Initiatives on Private Health Insurance Coverage in Australia," The Economic Record, The Economic Society of Australia, vol. 81(254), pages 262-272, September.
    3. Mingshan Lu & Elizabeth Savage, 2006. "Do financial incentives for supplementary private health insurance reduce pressure on the public system? Evidence from Australia, CHERE Working Paper 2006/11," Working Papers 2006/11, CHERE, University of Technology, Sydney.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Farrell, Lisa & Fry, Tim R.L. & Risse, Leonora, 2016. "The significance of financial self-efficacy in explaining women’s personal finance behaviour," Journal of Economic Psychology, Elsevier, vol. 54(C), pages 85-99.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Damien S. Eldridge & Ilke Onur & Malathi Velamuri, 2017. "The impact of private hospital insurance on the utilization of hospital care in Australia," Applied Economics, Taylor & Francis Journals, vol. 49(1), pages 78-95, January.
    2. Nathan Kettlewell, 2019. "Utilization and Selection in an Ancillaries Health Insurance Market," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 86(4), pages 989-1017, December.
    3. Denise Doiron & Nathan Kettlewell, 2018. "The Effect of Health Insurance on the Substitution between Public and Private Hospital Care," The Economic Record, The Economic Society of Australia, vol. 94(305), pages 135-154, June.
    4. World Bank, 2015. "Bulgaria Health Financing," World Bank Publications - Reports 22964, The World Bank Group.
    5. Judith Liu & Yuting Zhang, 2023. "Elderly responses to private health insurance incentives: Evidence from Australia," Health Economics, John Wiley & Sons, Ltd., vol. 32(12), pages 2730-2744, December.
    6. Gong, Xiaodong & Gao, Jiti, 2015. "Nonparametric Kernel Estimation of the Impact of Tax Policy on the Demand for Private Health Insurance in Australia," IZA Discussion Papers 9265, Institute of Labor Economics (IZA).
    7. Yicheng Kang & Xiaodong Gong & Jiti Gao & Peihua Qiu, 2016. "Error-in-Variables Jump Regression Using Local Clustering," Monash Econometrics and Business Statistics Working Papers 13/16, Monash University, Department of Econometrics and Business Statistics.
    8. Kettlewell, Nathan & Zhang, Yuting, 2023. "Financial Incentives and Private Health Insurance Demand on the Extensive and Intensive Margins," IZA Discussion Papers 16248, Institute of Labor Economics (IZA).
    9. Denise Doiron & Nathan Kettlewell, 2020. "Family formation and the demand for health insurance," Health Economics, John Wiley & Sons, Ltd., vol. 29(4), pages 523-533, April.
    10. Vijaya Sundararajan & Ou Yang & Jongsay Yong, 2023. "Socioeconomic status and access to care in a universal healthcare system: The case of acute myocardial infarction in Australia," Melbourne Institute Working Paper Series wp2023n10, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    11. Francesco Paolucci & Amir Shmueli, 2011. "The Introduction of Ex-ante Risk Equalisation in the Australian Private Health Insurance Market: A First Step," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 18(2), pages 71-92.
    12. Randall Ellis & Elizabeth Savage, 2008. "Run for cover now or later? The impact of premiums, threats and deadlines on private health insurance in Australia," International Journal of Health Economics and Management, Springer, vol. 8(4), pages 257-277, December.
    13. Doiron, Denise & Fiebig, Denzil G. & Suziedelyte, Agne, 2014. "Hips and hearts: The variation in incentive effects of insurance across hospital procedures," Journal of Health Economics, Elsevier, vol. 37(C), pages 81-97.
    14. Nathan Kettlewell & Yuting Zhang, 2021. "Age penalties and take-up of private health insurance," Melbourne Institute Working Paper Series wp2021n28, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    15. Buchmueller, Thomas C. & Cheng, Terence C. & Pham, Ngoc T.A. & Staub, Kevin E., 2021. "The effect of income-based mandates on the demand for private hospital insurance and its dynamics," Journal of Health Economics, Elsevier, vol. 75(C).
    16. Moorin, Rachael Elizabeth & Holman, Cashel D'Arcy James, 2007. "Modelling changes in the determinants of PHI utilisation in Western Australia across five health care policy eras between 1981 and 2001," Health Policy, Elsevier, vol. 81(2-3), pages 183-194, May.
    17. Ha Trong Nguyen & Huong Thu Le & Luke Connelly & Francis Mitrou, 2023. "Accuracy of self‐reported private health insurance coverage," Health Economics, John Wiley & Sons, Ltd., vol. 32(12), pages 2709-2729, December.
    18. Denise Doiron & Glenn Jones & Elizabeth Savage, 2008. "Healthy, wealthy and insured? The role of self‐assessed health in the demand for private health insurance," Health Economics, John Wiley & Sons, Ltd., vol. 17(3), pages 317-334, March.
    19. Roger Carrington & Tim Coelli & D.S. Prasada Rao, 2011. "Australian Private Health Insurance Productivity Growth: Is there Scope to Limit Premium Increases?," The Economic Record, The Economic Society of Australia, vol. 87(276), pages 125-139, March.
    20. Francesco Paolucci & James R. G. Butler & Wynand P. M. M. van de Ven, 2011. "Removing Duplication in Public/Private Health Insurance in Australia: Opting Out With Risk-adjusted Subsidies?," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 18(2), pages 49-70.

    More about this item

    Keywords

    private health insurance; Australia;

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:her:chewps:2007/8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Liz Chinchen (email available below). General contact details of provider: https://edirc.repec.org/data/chusyau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.